European Parliament backs emissions trading for aviation

London, 06 July: The European Parliament on 4 July voted strongly in favour of an emissions trading scheme (ETS) for the aviation sector that is separate from the EU ETS.

It also called for the introduction of a tax on jet fuel, policy measures to cover the non-carbon dioxide (CO2) impacts of aviation and the ending of VAT exemptions for air transport.

The proposals are parliament's response to a September 2005 Communication by the European Commission, which outlined the Commission's plans to introduce legislation to reduce aviation's impact on climate change. This included a recommendation to bring the sector into the EU ETS.

According to a recent report by NGOs CAN Europe and the European Federation for Transport and Environment, CO2 emissions from aviation increased by 83% between 1990, the Kyoto Protocol's base year for GHG emissions, and 2004 (the latest year for which figures are available).

Parliament's plan would create a stand-alone scheme – at least for a pilot phase over 2008-12 – covering all flights to and from EU airports. The separate scheme is proposed because the Kyoto Protocol does not cover international aviation, and including aviation in the existing ETS would "seriously complicate the accounting system linking the EU ETS and the Kyoto Protocol", the plan said.

However, if at a later date aviation is eventually incorporated into the EU ETS, special conditions should be applied to the sector to ensure it does not distort the market. This is because aviation is expected to be a net buyer of EU allowances (EUAs), parliament said.

Parliament therefore proposed a yet-to-be-determined cap on the amount of EUAs that aviation is allowed to buy, and would require the sector to make some emission reductions through measures other than trading. It has also asked the Commission to present an impact assessment on the parameters of its proposals, ensuring that the scheme will be applicable to airlines from outside the EU.

It is now up to the Commission to take account of parliament's view, as well as the European Council (which represents member state governments), in drafting a legislative proposal dealing with aviation's effect on climate. The Commission is expected to make a formal proposal before the end of the year.

The Brussels-based International Air Carrier Association (IACA), which represents 39 airlines worldwide, reacted with dismay to the vote. "Any approach to aviation and the environment which calls for the simultaneous introduction of taxes on aviation fuel, VAT on airline tickets, environmental charges at airports and emissions trading totally ignores economic realities," says Sylviane Lust, IACA director general.

In a position paper in response to parliament's proposals, IACA notes that a separate ETS for aviation would not work because "there would be no market" as all the trading entities would be net buyers of allowances.